The brunt of school budget cuts -- teacher layoffs, reductions in art, music and gym and cutbacks in extracurricular programs -- will affect children in school systems struggling with youngsters in high poverty who need tutoring or extra help during the school day, after school and over the summer.

How is our educational system being reshaped by this economic distress and, more importantly, what does that mean for our children?

Educators say it could mean crowded classrooms and fewer classroom aides. It could mean consolidating programs and buildings. It could mean reducing summer school. In some districts, it could mean eliminating art, music and gym.

For school employees, it could mean renegotiating contracts with the teacher's union and other employee groups, outsourcing transportation and custodial services, suspending matches of retirement benefits, freezing salaries and renegotiating insurance and other benefits.

And parents and students should brace for more cuts in 2011.

Educators acknowledge that funding schools through property taxes was not perfect but it was predictable. Now, two years into legislators' decision to shift more funding responsibility to the state, districts are forced to deal with the volatility of state revenue, particularly the sales tax.

That shift and the collapse of the economy are the culprits of the school funding woes that we are dealing with now, said Terry Spradlin, associate director of the Center for Evaluation and Education Policy at Indiana University in Bloomington.

"The state has collected far less revenue than expected," he said. "As of today, we're off by nearly $900 million. No one projected that kind of revenue shortfall, especially so soon after the state took over the general fund."

Retaining practical goals

Indiana's top educator, state schools Superintendent Tony Bennett is pushing for reform and educational gains despite the negative revenue forecasts.

Bennett said the state Department of Education expects that each school year every student should learn one year's worth of information no matter where that student falls on the achievement scale. Bennett intends to pull Indiana up from its middle-of-the-road ranking to being among those states showing academic excellence.

Earlier this year, the College Board reported that 15.9 percent of public school students graduated from high school in 2009 having scored well on at least one Advanced Placement exam, a test that is predictive of college success. Indiana had 10.4 percent, behind the national statistic, as well as neighboring states Ohio, Kentucky, Illinois and Michigan.

By the end of his term in 2012, Bennett is pushing to have 90 percent of all students passing both math and English/language arts sections of ISTEP-Plus and end-of-course assessments and 90 percent of all students graduating from high school.

That's compared to a current status of 73 percent of students passing both math and English on the annual ISTEP tests section and end-of-course assessments now and an average of 77.8 percent of students graduating from high school in the 2007-08 school year.

If the state wants to improve education, Merrillville Community School Corp. Superintendent Tony Lux said Republican Gov. Mitch Daniels is going to have to make a choice -- more education cuts or higher taxes.

School officials in traditional public schools as well as charter schools received a memo May 11 from Lance Rhodes, chief financial officer of the Indiana Department of Education, recommending schools begin the 2011 budgeting process assuming a cut similar to what they experienced this year.

State officials encouraged school leaders to budget "cautiously and conservatively" in case state revenue collections do not improve.

Lux said if next year's cut is the same as 2010, he will lose at least another $1.8 million.

Transferring money

Both Lux and School Town of Highland Superintendent Michael Boskovich said they intend to take advantage of new legislation that allows districts to transfer money between funds. For Merrillville, it will mean transferring $260,000 into the general fund. For Highland, Boskovich said it will mean transferring $75,000 into the general fund to assist with salary and benefits. He said the district has about $400,000 in its cash reserves, but he expects that to be wiped out next year.

Though he wasn't in office at the time, Bennett said he supported state property tax caps and moving the general fund budget away from property taxes to state support, moves that were approved in 2008 and took effect last year.

"Many people would say that local property taxes were more stable, but one could argue that it allowed schools to budget backwards," Bennett said. "There is no other industry where we generate revenue to meet expenses. Under the new way of budgeting, we know what the revenue is and we have to manage our expenses accordingly."

Because the state supports school general funds, the revenue-stripping property tax caps do not impact school general fund budgets, said Melissa Ambre, finance director for the Indiana Department of Education.

However, it will have some impact on other funds such as debt service or transportation, she said.

In Highland, the district had to cut $1.8 million this year. It had to cut nearly $900,000 as a result of state funding cuts. It lost another $900,000 from excise taxes and a little more than $200,000 because of declining enrollment.

The Highland School Board voted to cut 4.5 teaching jobs and eliminated a variety of aide positions including instructional aides, English as a second language aides, clerks, librarians and secretaries. Seven custodians were eliminated.

However, Boskovich will be able to preserve a dozen teaching positions in the fall by tapping $1 million from the teacher's insurance reserve.

Another solution being used by a dozen school districts in the state asking their respective communities for more money through a referendum. Of that number, eight have passed.

Bennett does not believe the federal No Child Left Behind Act will be reauthorized this year. However, he hopes that when it is considered it will include a measure for student growth. He also said he hopes there will be more state autonomy to build an accountability system.

According to U.S. Department of Education website, No Child Left Behind is based on four principles: stronger accountability for results, more freedom for states and communities, proven education methods and more choices for parents.

Indiana developed Public Law 221, a few years ahead of NCLB, to establish major education reform and accountability statewide.

During highly-publicized visits and invoking the requirements of Indiana's Public Law 221, Bennett said the state could take over 23 failing schools, six of them in Lake County.

The federal government has suggested various strategies for turning around the nation's lowest performing schools, from replacing the principal and at least 50 percent of the teaching staff to closing the failing school and enrolling students in other higher-achieving schools in the district.

In early May, the State Board of Education approved a plan to substitute letter grades for the descriptive terms such as exemplary progress or commendable progress under state law.

Gov. Daniels is expected to approve the new system, which will assign letter grades based on student performance and improvement on ISTEP tests.

He said the grades are too focused on ISTEP results, and that the annual test doesn't take into account how many days a child has been in that school, whether the child is proficient in English or has special needs.

A veteran teacher from an urban school district who wants to remain anonymous agreed. She describes the NCLB legacy as "No School Left Standing."

"The mandates aren’t realistic because not all students are alike. None of the legislation takes into account factors like poverty, disabilities, or the lack of monetary resources for some school districts," she said.

"Instead of educating children, we’re teaching to the test. That doesn’t leave time or room to foster imagination, creativity or a love of learning."

In November 2009, Bennett announced the Indiana would aggressively pursue a piece of the more than $4 billion in the "Race to the Top" grants. Indiana had hoped to win $250 million or more to pay for new programs. However, in late March, Delaware and Tennessee won the grants in the first phase of Race to the Top. Indiana dropped out with Bennett saying he didn't have the support of state teacher unions.

More changes in Indiana policies coming

A new era in teacher licensing and preparation begins this summer, and some in the education profession question how these new regulations will impact the education of generations to come.

On Jan. 7, the state board overseeing teacher licensing and preparation changed the regulations to allow adults from other careers to more easily transition into the teaching profession and to require that all new teachers be experts in the subjects they teach.

The changes include the following:

* Elementary teachers (K to 6) must earn a baccalaureate degree consisting of an education major with a content-area minor OR a content-area major with an education minor.

* Secondary teachers (grades 5 to 12) must receive a baccalaureate degree consisting of any applicable content-area major as well as a minor in education.

REPA, the Rules for Educator Preparation and Accountability, was passed after three public meetings held in central and southern Indiana.

The REPA regulations will be effective July 31, 2010. Students currently enrolled in teacher preparation programs will be transitioned into these new rules between now and August 2013.

Education funding

Underneath all of this remains the issue of school funding. School budgets are at the mercy of state revenue. Indiana is not the only state experiencing revenue shortfalls. Other states have cut hundreds of millions of dollars in education funding. Virtually every state in the country has had to eliminate teachers.